More and more binding arrangements are developed via e mail or on line and the law, as usual, must catch up with the far more progressive world of business and retail. This 2014 case in California spells out what is required to make a binding agreement via electronic signature in California. This law will continue to develop so be sure to check any new variations on the law before relying on this particular case.


Summary:  Held in J.B.B. Investment Partners, Ltd. v. Fair (2014) 232 Cal.App.4th 974, (First District Court of Appeal) by unanimous verdict: (1) the requirements of the Uniform Electronic Transactions Act (UETA), Civil Code section 1633.1 et seq. must each be complied with before an electronic signature can be accorded legal effect, and (2) one of those indispensable elements specified by the UETA is that all parties to the transaction agree to conduct the transaction by electronic means (Civ. Code, § 1633.5, subd. (b).).


Facts:  Trial Court Enforced E mail Commitment to Settlement.

Plaintiffs’ counsel transmitted a settlement demand to one of the defendants by e-mail.  The defendant who received the e-mail responded several times, indicating his agreement to the settlement terms.  Following that e-mail exchange, plaintiffs’ counsel circulated a formal written settlement agreement to all of the parties for physical signature.

Not all parties executed the later written settlement agreement, including the defendant who had earlier indicated his assent by e-mail.

Plaintiffs brought a motion under Code of Civil Procedure, § 664.6, to enforce the settlement terms memorialized by the e-mail exchange that pre-dated the circulation of the ultimately unexecuted written formal settlement agreement.  The trial court agreed with plaintiffs that the defendant’s signature must be accorded legal effect under Civil Code section 1633.7.  That statute enunciates the fundamental import of the UETA, as follows:


(a)     A record or signature may not be denied legal effect or enforceability solely because it is in electronic form.

(b)     A contract may not be denied legal effect or enforceability solely because an electronic record was used in its formation.

(c)     If a law requires a record to be in writing, an electronic record satisfies the law.

(d)     If a law requires a signature, an electronic signature satisfies the law.


Relying upon Civil Code section 1633.7 and the corresponding defendant’s admission at his deposition that he intentionally inserted his name at the end of each e-mail he sent to the plaintiffs’ counsel, the trial court determined that the terms memorialized by the e-mail exchange were subject to enforcement under Code of Civil Procedure section 664.6, and entered judgment against the one defendant accordingly.  Following the entry of judgment, the trial court denied the plaintiffs’ motion for attorney fees, finding that no agreement existed between the parties, providing for such recovery in litigation.


 Appellate Court Decision-No Binding Agreement:

Reasoning:  Consistent with established case law, the Court of Appeal reviewed the trial court’s findings under the substantial evidence standard of review, resolving all evidentiary conflicts and drawing all reasonable inferences in support of the trial court’s finding of an enforceable settlement, consistent with the policy favoring settlements.

 But in reviewing the record, the Court found no substantial evidence in the record to support the trial court’s judgment. 

First, the Court determined that the trial court’s record failed to disclose that all parties (i.e., litigants) to the action had executed the settlement agreement, rendering the purported settlement agreement unenforceable under Code of Civil Procedure section 664.6, pursuant to established case law, such as Levy v. Superior Court (1995) 10 Cal.4th 578, 584, 586; and Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 305. 

Second, the Court of Appeal determined that the settlement terms could not be independently enforced against the single defendant who signified assent, prior to the presentation of a formal settlement agreement.  In this regard, the Court noted that while a printed name or other symbol might be sufficient to constitute a signature under the UETA under appropriate circumstances, those circumstances were not established in the trial court’s record in this case.  Specifically, the Court held absent any evidence establishing the fundamental requirement of Civil Code section 1633.5, subdivision (b)—that is, an agreement of the parties to conduct the transaction by electronic means.


Key Lesson: As the law now stands in California, electronic signatures will not be accorded legal effect, unless all the parties have agreed to conduct the transaction electronically. 

While such an agreement can be proven by the context and conduct of the parties under Civil Code section 1633.5, subdivision (b), there would seem to be no guaranteed method of establishing that requirement absent a clear and unequivocal provision in the document itself which provides that the parties intend to use and rely upon electronic signatures.